"P in a Pod":(Physician Owned Distributorship): Physicians as Investors and Distributors in the Gadget Placed in Your Spine

If you have chronic back pain and your doctor refers you to an orthopedic surgeon who tells you that he or she can relieve the pain by inserting an appliance in your spine, there is a worry that the surgeon may be offering the surgery mainly for the surgeon's financial interest in that very appliance. 

What is "Physician Owned Distributorship" (POD) and what is its significance to medical practice and the ethical and lawful behavior of the profession?  To get some insight into the POD and its current status, what follows is an explanation as copied from an investigation published by Radio Station KPCC as part of the station's full presentation of the issue.

What is a POD?

A POD is a Physician Owned Distributorship. Under this business model, a doctor is an investor in, and distributor of, the devices or hardware he may put into his patients. Multiple doctors can have a financial interest in one POD.

Is that business arrangement legal?

In and of itself the arrangement is legal, but the Department of Health and Human Services’ Office of Inspector General has concluded that PODs are “inherently suspect under the anti-kickback statute.” It issued fraud alerts about PODs in 2006 and in 2013.

Can I find out if my surgeon is involved in a POD?

Currently, your physician is under no legal obligation to disclose that information. The Sunshine Act, a provision of the Affordable Care Act, does require that each year, certain medical device makers and distributors disclose to the Centers for Medicare and Medicaid Services ownership or investment interests held by physicians or their immediate family members. The law requires the Centers to post online the first batch of information it received by September.

Does the ‘Sunshine Act’ require my doctor to inform me that he is involved in a POD?

No. You will have to ask on your own, or search that Centers for Medicare and Medicaid Services website when it is published. The Centers say the site “will be organized and designed to increase access to and knowledge about these relationships and to provide information to enable consumers to make informed decisions.”

Yes, there are laws preventing physicians from referring their patients to facilities in which they own and invest for laboratory services or procedures. The Federal regulations called Stark (after Pete Stark, congressman who was its primary sponsor) can be summarized as follows: A physician may not make a referral to an entity for the provision of a designated health service (“DHS”) for which Medicare payment may be made (and the entity may not present a claim for services provided as a result of such a referral) if the physician or an immediate family member has a financial relationship with the entity unless either the referral or the financial relationship is “excepted” from the statute’s coverage.  To read more about Stark regulations, here is the link to a paper by Homchick and Looney which explains its current status.

Please read the excellent KPCC article about this unsettled and unsettling issue and then return back here and write what you would you think about Physician Owned Distributorship and its implications regarding providing the least expensive but the best in medical care.  Balancing the right of private investment by any person versus the need for unbiased decision-making and care by your physician, how do you size up POD, ethically, legally and if you were the patient with that back pain and were told "I have just the operation that can fix it"? ..Maurice.

Graphic: From Google Images and modified by me with ArtRage and Picasa3.